Physicians do business with many people and entities in their medical practice. This includes patients, billing services, insurance companies (including health maintenance organizations (HMO) and preferred provider organizations (PPO)), liability insurance providers, government providers (such as Medicare and Medi-Cal), and governing agencies (such as the Medical Board of California (MBC) and the United States Drug Enforcement Agency). When a medical practice is sold or closed, the physician must give notice—in different forms—to all of them.
A physician—and his or her successor—can incur liability for patient abandonment if a physician-patient relationship is terminated without adequate notice to a patient. The MBC advises that a physician should notify patients, in writing, return receipt requested, when the physician will discontinue patient care, specifying:
- The last day the physician will be available to provide medical care, assuring the patient has been provided at least 15 days of emergency treatment and prescriptions before discontinuing the physician’s availability;
- Alternative sources of medical care (e.g. refer patient to other physicians, by name, or to the local medical referral service);
- The information necessary to obtain the medical records compiled during the patient’s care (e.g. who to contact, how, and where);
- The last day the physician will be available to provide care;
- Information about alternative sources of care (e.g. such as the possibility of choosing another physician); and
- How the patient can obtain his or her medical records. This would include an authorization to have the records transferred to another physician of their choosing
In addition to patients, a physician must give notice to each of those third-party paying entities from which he or she has accepted payment on behalf of his or her patients.
- Medicare – terminate an individual physician’s Medicare enrollment and provider number (90-days’ notice) or 5-percent ownership change in the organization (30-days’ notice)
- Medi-Cal – deactivate an individual physician’s Medi-Cal number or 50-percent ownership change in the organization (5-days’ notice)
- HMO / PPO – most contracts allow physicians to terminate without cause, usually on 90-days’ notice
In addition, a physician closing his or her practice should deactivate his or her National Provider Identifier (“NPI”) as soon as the physician has completed all transactions with all health plans.
Professional Liability Insurance
A physician who is retiring should contact his or her professional liability carrier as soon as possible. The carrier may have a particular checklist for the doctor to follow to ensure that it is following best practices for closing the practice. This includes information regarding the notices contained within this post, but also guidance regarding minimizing your risk for liability exposure in the transfer of assets and maintaining patient records if the practice is actually being sold.
Many professional liability carriers provide continuing (“tail”) coverage; some professional liability carriers provide free tail coverage if the physician has been with the insurance company for a designated period of time. If the physician is transferring his or her practice, the purchase and sale agreement should include a provision identifying the party who will pay for tail coverage.
Medical Board of California
If a physician is selling his or her practice and wishes to retire, he or she may apply for a retired license from the MBC using MBC Form 07R-44 “Retired Physician Application for Exemption from Payment of Renewal Fee/No Practice Allowed.” If a physician anticipates that he or she may wish to practice medicine in the future, he or she may choose to inactivate, rather than retire, the license, using MBC Form 07M-121, “Application for Inactive License.”
U.S. Drug Enforcement Administration
If a physician is retiring, he or she must send a letter to the local DEA office, asking for the retirement of the physician’s certificate of registration. It is prudent for the physician to return any DEA 222 order forms along with the letter.